The , the central bank of the United States, targets the _ to influence the economy....

The __________, the central bank of the United States, targets the ___________ to influence the economy.

Question options:

	United States Bank; policy rate
	Bank of the United States; Federal Funds Rate
	Federal Reserve Bank, prime lending rate
	Federal Reserve Bank; Federal Funds Rate

Solutions

Expert Solution

The central bank of the United States is the Federal Reserve Bank, which was established to provide a flexible and stable fiscal and monetary system. The Federal Reserve Bank monitors the economy's monetary policy to stablize the economy from any shocks.

So, the answer is FEDERAL RESERVE BANK.

Federal funds rate is the target interes rate set by the Federal Open Market Comittee (FOMC) at which the commercial banks lend and borrow funds to each other on an overnight basis. Prime lending rate is the interest rate charged by the commercial banks for lending to customers. The prime lending rate is primarily determined by the federal funds rate.

To influence the economy, the central bank targets the federal funds rate which directly effects the borrowing and lending of the banks. The changes in federal fnds rate indirectly effect the prime lending rate, as the latter is based on the former.

So, the answer is FEDERAL FUNDS RATE.

The Federal Reserve Bank, the central bank of the United States, targets the Federal Funds Rate to influence the economy.

Rahul Sunny answered 1 year ago

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